Ken Connor
January 9, 2013
Cliff notes
By Ken Connor

It's that time of year again, time for fresh starts, optimism for the future, and New Year's resolutions. Unfortunately, there's nothing fresh, optimistic, or resolute coming out of our nation's capital these days. After a months' long game of political chicken, Congress managed to maneuver its way around the worst elements of the dreaded "fiscal cliff" at the 11th hour. What they failed miserably to demonstrate is an ability to address America's dire fiscal situation in a serious manner.

In describing the "grand bargain" that emerged from weeks of rhetorical back-and-forth between the White House and Speaker Boehner's office, the Wall Street Journal had this to say:

"The Senate-White House compromise grudgingly passed by the House is a Beltway classic: The biggest tax increase in 20 years in return for spending increases, and all spun for political purposes as a 'tax cut for the middle class.' But taxes on the middle class were only going up on January 1 because the politicians had set it up that way, manufacturing a fake crisis. The politicians now portray themselves as scrambling heroically to save the day by sparing the middle class while raising taxes on small business, investors and the affluent."

Indeed, Congress taking a bow for averting the fiscal cliff is like an arsonist claiming credit for putting out a fire that he started. The "fiscal cliff" was a creature of Congress's own creation! Congress orchestrated a recession-inducing convergence of tax hikes and spending cuts as a way to coerce themselves into getting serious about passing a balanced budget, addressing the deficit, and initiating entitlement reform. Now our august representatives want to take credit for escaping the potential danger that they created, all the while having managed to avoid doing anything to address the problems the whole sequestration contingency was geared towards solving. Only in Washington, D.C., can such a pathetic outcome be spun as a victory for the people.

I suppose if one is inclined to make lemonade from lemons, there are a few bright spots in the disappointing compromise cobbled together at the last possible moment. It's good that the Bush-era tax cuts have been made permanent. This at least provides some economic stability for small businesses and entrepreneurs to hang their hats on in this rather uncertain economic environment. Of course this good news is tempered somewhat by the expiration of the payroll tax holiday. And the compromise reached regarding the estate tax only looks good in comparison to what would have been if Mr. Obama had gotten his way. He wanted 45% and only got 40%. President Obama and his spendthrift, big government congressional cohorts now get 40% of your accumulated wealth over $5 million when you die — money that you've already paid taxes on once, if not twice or three times. Bet you don't think death should be a taxable event, but leave it to Big Brother to find a justification for taking the pennies from your eyes.

As many have pointed out, however, the real challenge is yet to come. In a few weeks we'll begin hearing news of more late night negotiations, all for the purpose of delaying yet again the worst of the sequestration measures from taking effect. Then, of course, there is the debt-ceiling debate looming. The President, in full professorial mode, has already made clear that he will not get on this particular horse again. He seems to think he has the authority to raise the debt limit through the bully pulpit, and wishes he had the constitutional authority to do so via Executive Order. But he can't, and thankfully he doesn't. That debate, and others, will happen and happen soon. Can Congress overcome its addiction to spending? Will it risk alienating interest groups and constituencies who trade votes for government largesse? The odds don't look good, but hope springs eternal, as they say.

One thing's certain: Unless we get spending under control, the pressure for more taxes will be unrelenting, and America will continue to slouch towards European-style quasi-socialism.

© Ken Connor


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